Open AccessAn autoregressive analysis of the determinants of private savings in Nigeria
Author(s) -
Adeniyi Jimmy Adedokun,
Olabusuyi R. Falayi,
Adebowale M. Adeleke
Publication year - 2020
Publication title -
review of innovation and competitiveness
Language(s) - English
Resource type - Journals
eISSN - 1849-8795
pISSN - 1849-9015
DOI - 10.32728/ric.2020.61/1
Subject(s) - dependency ratio , distributed lag , economics , short run , payment , social security , investment (military) , private sector , autoregressive integrated moving average , dependency (uml) , econometrics , time series , finance , macroeconomics , economic growth , statistics , engineering , market economy , population , demography , mathematics , systems engineering , sociology , politics , political science , law
Purpose. Despite the increasing trend of private savings in Nigeria, thecountry is still characterised by low investment and output growth, thus, suggesting that the average saving rate is still far from being impressive. This study investigates the determinants of private savings in Nigeria.Methodology. Autoregressive Distributed Lag (ARDL) Model using annual time series data from 1981 to 2016 within the theoretical framework derived from the life-cycle hypothesis is employed in this study. The key variables under investigation are private savings, income, dependency ratio, real interest rate, social security payment, financialdevelopment and macroeconomic stability. The data used for analysis aresourced from Central Bank of Nigeria Statistical Bulletin (2016) and World Development Indicator (2016).Findings. The results show that lifetime income and social security payment have significant positive relationship with private saving in the long-run, while adult dependency has significant negative relationship. In the short-run, adult dependency and social security payment have significant positive relationship with private savings. In addition, the result shows that 62% of deviation from the long-run equilibrium level of private savings is annually corrected for by the model estimated.Originality. This research investigates both the long-run and short-run effects of the various determinants of private savings in Nigeria. Thus,the study can serve as eye opener to the important variables that can improve the level of private savings in Nigeria.